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untanglingwebs
El Supremo
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Guest column: Change tax code to feed starving Michigan cities
Guest Column — 08 May 2012
SAVE THE CITIES: Flint and other Michigan cities can't help Michigan grow if they lack the money to fund key public services, argues Mayor Dayne Walling. (Bridge archive photo)
By Dayne Walling/Flint mayor
In Michigan, cities were the greatest victims of the recent near failure of the economy and the housing market. Michigan is not seeing the same renaissance of returning to the city at a significant rate equal to the national trend.
The problem is that all of the cuts to government here have run downhill to city halls and the resources are simply not sufficient to sustain basic services in an environment with rising costs of everything from health care to fuel.
Faced with this challenge, unfortunately, the state is keeping city governments on a starvation diet of primarily shrinking property tax revenues and uncertain shared revenues. In fact, the state is contemplating accelerating the shrinking property tax values associated with soft real estate markets by phasing out much of the personal property (i.e., equipment) tax.
Dayne Walling is serving his second term as mayor of Flint.
One approach being tried with urban budgets is to change management authority and cut spending requirements by reforming labor contracts and outdated practices. This has fallen short of offsetting the recent revenue reductions in Flint.
New contracts imposed by the state-appointed emergency manager will make public safety officers some of the lower-compensated in Michigan, despite the extraordinary workload of crime, arson and violence (e.g. 10 times more violent crimes per officer than Ann Arbor) in Flint. Even so, 10 percent of the already minimally staffed Police Department will be laid off and more than 30 percent of the firefighters will be out of a job with the new budget this summer — unless new grant funds are identified soon.
This fuels a cycle of central city decline, in which prospective city dwellers in the regional housing market can chose to locate outside the city limits and thereby avoid paying the legacy costs embedded in city operations and the higher resident income tax, but still conveniently access core amenities such as universities and museums.
There are alternatives.
What all governments need are fair and stable revenue sources that allow for the expected provision of services. Just as the tax code needs to encourage business growth and expansion, it also needs to offer adequate returns for government services rendered.
Reforming the local income tax is a good place to start. By eliminating the disparity in the local income tax rates for residents and nonresidents of cities, this portion of the playing field would be leveled between cities and suburbs in regards to residential location. This change could generate $100 million for Flint over a seven- to 10-year period at Flint’s current resident rate of 1 percent. If the allowable local income tax was equal across Michigan’s cities at Grand Rapid’s rate (1.3 percent for residents), then Flint would see up to $200 million more in revenues.
An additional solution is a broader (not higher) sales tax that is in sync with the current service economy. The expanded funds collected by the state would support increased shared revenues for local governments.
There also are innovative property tax systems such as land value taxation that separates the value of the land itself from the buildings and equipment on it. Set at the optimal rate, this discourages speculation and encourages private investment — the twin objectives of city real estate market improvement. Pittsburgh, Pa., has a similar approach and is one of the models for Midwest urban redevelopment.
The point is that it is past time to adopt a balanced and healthy fiscal diet for cities. It is a false choice to set good local government and taxes against business growth and development. The table needs to be cleared and set again with equitable and sustainable policies if the goal is to truly grow prosperous cities again in Michigan.
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Rich
May 8, 2012 at 9:44 am
Feed the Cities, yes, but first …….. eliminate all the corruption, nepotism, theft, no bid contracts, and all illegal and immoral doings within the governmental entities. And if an entity can not eliminate all that is bad within itself, then let it rot on the vine.
Lance Weyeneth
May 8, 2012 at 10:10 am
“Re-Setting the table…” Could start with dissolving 1260 governmental units now known as Townships. We have 83 Counties in Michigan. Those should be the only entity between our Villages, Cities and State Governments.
T.W. Donnelly
May 8, 2012 at 2:57 pm
There are many creative solutions to the shortage of funds found in cities and towns across the state.
The state keeps track of how much liquor, beer and wine sold in each city. Raising the tax on beer by just a few cents would create quite a pot of money. The state is awash in beer.Every grocery store devotes a full aisle to the various brands of beer. One sees beer trucks all over the place. Raising the tax just a few cents per bottle would not impoverish any beer drinker, but it would generate needed funds.
Professional sports tickets should be taxed. Often the venues involved in a sport are paid for with state funds, like the Silverdome. Sports enthusiasts drive on public roads to attend events.Again putting a tax on sports tickets will not impoverish someone who can afford to pay for those expensive tickets, overpriced beer and hot dogs.
I bought a new garage opener and had it installed by Home Depot. The cost of the unit and installation was $300., but because it is an in-home install, there was no sales tax. I woulod gladly have paid my $18.00 tax on that install. Extending sales tax to in home installs would generate a lot of cash.
Taxing hair cuts would not break anybody. The same would apply to beauty shops.
So, there are numerous ways to generate revenue to help cities and towns maintain good services like police and fire protection. Just a little backbone is needed in the legislature.
B
May 8, 2012 at 4:38 pm
Dayne, if only this Legislature gave a rip about any city in SE Michigan. I get the impression, however, that everyone elected west of Ann Arbor wishes Flint, Pontiac and Detroit would just slide slowly into Ohio and get out of the way. |
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Wed May 09, 2012 8:32 am |
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untanglingwebs
El Supremo
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Walling: Flint emergency manager reforms 'fallen short' of revenue reductions
Published: Wednesday, May 09, 2012, 8:22 AM Updated: Wednesday, May 09, 2012, 8:22 AM
By Kristin Longley | klongley1@mlive.com
FLINT, MI -- Flint Mayor Dayne Walling said revisions to Michigan's tax code are needed to help struggling cities such as Flint rebound and contribute to a statewide recovery, he says in a guest column in Bridge Magazine.
The state is keeping cities on a "starvation diet" of unstable state-shared revenue and shrinking property tax revenue, he said in the column published by the nonprofit think tank, Center for Michigan.
Walling says the state's approach of sending in an appointed emergency manager to cut spending, change union contracts and enact reforms has "fallen short of offsetting the recent revenue reductions in Flint."
"This fuels a cycle of central city decline, in which prospective city dwellers in the regional housing market can chose to locate outside the city limits and thereby avoid paying the legacy costs embedded in city operations and the higher resident income tax, but still conveniently access core amenities such as universities and museums."
Walling said changes to the tax code, including lifting the state cap on the income tax rate and broadening the sales tax, would help put cities on an even playing field.
Walling also says union contract changes imposed by emergency manager Michael Brown would make public safety officers "some of the lower-compensated in Michigan."
Walling had requested double-digit contract concessions from city unions for nearly two years prior to the state takeover, but was unable to reach an agreement with the public safety employee groups.
Read the entire column here. |
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Wed May 09, 2012 8:36 am |
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untanglingwebs
El Supremo
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burtonguy May 09, 2012 at 8:59AM
The legacy costs should have been funded when the revenue that produced the expense occured. To promise money later and not save money for the expense is poor financial management. Flint has over $800 million in OPEB promised and 0% funded. How is that going to be paid? The question is not bankruptcy but when.
doinit4me May 09, 2012 at 9:02AM
Where do I start with Walling's hypocrisy? Walling did absolutely nothing to facilitate negotiations with the Police unions in hopes of being granted the powers of an EFM. Nothing like jumping on the band wagon of anti-Brown sentiment during a time when Walling is supposed to be helping in the effort to make things right in Flint. Oh, but a "politician" just can't help himself when an opportunity to shine the spotlight on his own agenda arises. I hope Mr. Brown returns the favor in kind and eliminates Walling's pay. Walling may be correct in his assessment of the financial issues but he just can't get anything done without putting his own political well-being in front of the truth and Flint's citizens
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Mr. Walling, "I knew Bill Clinton, Bill Clinton was a friend on mine and you're no Bill Clinton." Not really, I just thought it remotely applied and sounded good.
Kristin Longley | klongley1@mlive.com May 09, 2012 at 9:05AM
burtonguy,
Good point. The emergency manager has said often that Flint's legacy costs are a significant contributor to its current fiscal crisis. As for bankruptcy, are you advocating for it, or simply saying it's inevitable? Just curious, since I've heard arguments for and against it.
Thanks for reading,
Kristin |
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Wed May 09, 2012 8:41 am |
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untanglingwebs
El Supremo
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Definition of 'Other Post-Employment Benefits - OPEB'
Post-employment benefits that an employee will begin to receive at the start of retirement. This does not include pension benefits paid to the retired employee. Other post-employment benefits that a retiree can be compensated for are life insurance premiums, healthcare premiums and deferred-compensation arrangements.
Read more: http://www.investopedia.com/terms/o/opeb.asp#ixzz1uNbgGPRv |
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Wed May 09, 2012 8:42 am |
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untanglingwebs
El Supremo
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This forum has addressed several issues voiced in this article:
Flint Police are already among the lowest paid in Michigan. These cuts will reduce some close to the poverty levels.
The Michigan Municipal League has addressed the issue of decreased revenue sharing. It is hard to ignore the fact that at part of the deficit coincides with the amount of lost revenue sharing. However, some of it comes from misuse of funds available.
The financial Review Board stated the water and sewer monies were improperly (possibly illegally) removed from the funds to be used elsewhere. These are "restricted funds' and can only be used in the water and sewer department.
Walling and Eason changed the recipient of the Department of Energy (DOE) grant . They and Donna Poplar were responsible for the workplace hostile environment complaints filed by four employees in the department of Community and Economic development. These employees filed complaints woth the DOe as whistleblowers, were fired and filed lawsuits.
Walling and Eason conspired with the Law Department to silence the voice of these employees in their Civil Service Commission complaints. They filed a law suit against the Civil Sevice Commission and attempted to stay a hearing. They did this the day of the hearing without notice to the commission.
The case was assigned to Judge Yuille, who was on vacation. Yuilles alternates were hayman, who had recused himself, and Neithercut. Neithercut refused the stay so Flint Assistant Prosecutor Kent went to Judge Farah and got it signed. |
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Wed May 09, 2012 9:02 am |
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untanglingwebs
El Supremo
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When yuille asked Kent why he went to another Judge after being denied by Neithercutt, Kent replied he was "ordered to find a judge". He declined to tell Yuille who gave the order, but I am sure Yuille pressed the issue when he ordered the attorneys into his chambers.
When council held an investigative hearing three law department attorneys raced to represent Steve Montle. This was despite an Appeals Court ruling for former City Attorney Trachelle Young that re-affirmed her position she and her office could not represent one entity of the city against another entity of the city. She could only provide each side with competant representation.
Bade also intervened on behalf of the mayor and himself that he was treating the DOE letter that terminated the grant and demanded repayment as a legal matter and it was not public as it was a legal matter. The letter came October 27th, a short time before the election for mayor. |
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Wed May 09, 2012 9:13 am |
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westflint
F L I N T O I D
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| Maybe time to leave this city, I can still come back to visit and enjoy the museums, art walks and bars, I will not have to pay the ridiculous water and sewer rates. Even better, I won't have to hear gunfire, see hookers, and constanly be hounded by beggars that knock on my door and ask for five dollars. I can live in a safter place with police protection, come back to work here and hardly pay a tax to this city. Did these city leaders think we would stay here and just bend over. At least three taxpayers I have talked to in my neighborhood are packing and leaving. Guess thats what these idiots were working tword. |
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Wed May 09, 2012 5:32 pm |
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untanglingwebs
El Supremo
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Flint police officers union president speaks out against contract changes, criticizes mayor's police cuts
Published: Thursday, May 10, 2012, 8:00 PM
By Kristin Longley | klongley1@mlive.com
l
FLINT, MI -- The Flint police patrol officers union president spoke out today against recent contract changes imposed by the emergency manager, as well as past police department cuts imposed by Mayor Dayne Walling.
In a press release issued today, Officer Kevin Smith noted that Walling wrote in a column published in Bridge Magazine that Flint police became some of the lower-compensated officers in Michigan with recent contract changes imposed by emergency manager Michael Brown.
Walling tried to negotiate double-digit concessions with police unions for two years prior to the state takeover, Smith said, but the two sides weren't able to reach an agreement.
The police staffing cuts made by the Walling administration didn't produce savings for the city in the long term, and now police officers are having to pay for those decisions, he said.
Overtime costs "skyrocketed" after layoffs, Smith said, leading to increased pension costs for the city for recently retired officers, among other costs.
"Insurance costs have risen drastically for our citizens and our business owners because of high crime rates," he said. "Worst of all, businesses have left our city."
Smith noted that the unemployment rate is more than 19 percent within the city of Flint.
"Where we need to add jobs is in the police department if you want to drive down crime rates and begin to once again attract business development dollars from the private sector to create jobs," he said.
Smith says the union has offered double-digit concessions in talks with the emergency manager, and has asked that staffing levels be maintained or increased. He said the 12-hour shifts imposed in union contracts would put officers lives in danger.
Brown said his office is still meeting and conferring with the unions at their request, and declined to comment on the specifics of those talks.
Walling responded to Smith's news release, saying city spending has declined because of reduced revenues, but the deficit continues to be a problem. The unemployment rate has dropped "substantially since the peak of the recession," he said in a statement.
"The income tax collections are one of the positive financial areas for the city," he said.
Walling said he supports stabilizing and increasing the staffing level of the Flint Police Department through an increase to the income tax.
"This is a time for all of us to come together around solutions for Flint," he said. |
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Thu May 10, 2012 7:52 pm |
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untanglingwebs
El Supremo
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K Smith May 10, 2012 at 8:45PM
Hey Kristin,
Thanks for the article. Our officers appreciate the coverage. For those who are interested, here is my entire statement from the press release:
"Now, police officers are being asked to pay for incompetence of city leaders who have driven the
city $25 million into debt since August 2009 when Dayne Walling was elected with a $500,000 budget
surplus. Overtime costs for police skyrocketed after his massive cuts to the police department. Extra
unemployment costs to the city were staggering at about $1 million per year. Just looking at 18 police
sergeants who recently retired, overtime they had under Walling's administration allowed their
pensions to escalate considerably since they are calculated by wages of their last three years of
work. Insurance costs have risen drastically for our citizens and our business owners because of high
crime rates. Worst of all, businesses have left our city. Unemployment currently stands at above 19%
within the City of Flint and welfare benefits are at an all-time high in our city despite fictitious election
year claims of adding 2,000 jobs. Where we need to add jobs is in the police department if you want to drive down crime rates and begin to once again attract business development dollars from the private sector to create jobs." |
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Thu May 10, 2012 7:54 pm |
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